Look Who’s Shorting Deutsche Bank

Ranger Equity Bear is the only ETF that incorporates fundamental-driven stock selection. Here’s what it’s betting against now.

It was a slap in the face to investors. After two full months of trading without a move greater than 1% in either direction in the Standard & Poor’s 500 index—a period in which the index hit multiple record highs—a sudden 2.5% one-day swoon earlier this month broke the calm. Wall Street strategists recently surveyed by Barron’sare more pessimistic about future equity returns than at any point since the wake of the technology bubble.

That means now may be an opportune time for investors to reacquaint themselves with bear funds, which employ short-sellers to bet against certain parts of the market. The funds are meant to guard portfolios against the brunt of sharp declines. It should be no surprise that this group has fared badly over the past few years as major stock benchmarks have rallied mightily.

But hedging, or protecting against, stock-market declines could be coming back into style. Though there are a handful of actively managed bear-market funds available to retail investors, the $198 million AdvisorShares Ranger Equity Bear exchange-traded fund (ticker: HDGE) is the only ETF that incorporates fundamental-driven stock selection to find its bearish bets.

Short-selling active managers earn their salt just like long-oriented stock pickers: beating the benchmark. The AdvisorShares ETF has tended to dart higher when markets tumble than its main rival, the ProShares Short S&P 500 ETF (SH), which is designed to move in the opposite direction of the S&P 500 each day. Take the period from late 2015 through early February, a bout of market duress that was kick-started by the Federal Reserve’s first interest-rate increase in nearly a decade. The actively managed AdvisorShares ETF rose nearly 26% as the S&P 500 fell 13%. This return roughly doubled that of the ProShares ETF over the same period.

Name:

Brad Lamensdorf

Age:

Co-portfolio manager

Education:

B.A., University of Texas

Hobbies:

Sailing, fishing

Even if an investor isn’t interested in the bear-fund category, there are insights to be gleaned from managers who make a living betting against stocks. Barron’s sat down with Brad Lamensdorf, a co-manager at Ranger Alternative Management, which has been running the short-selling ETF since its launch in January 2011.

Given the ETF’s unique requirement for daily transparency, investors can take peeks into its portfolio each day for glimpses of its short positions. Here are excerpts from our chat with Lamensdorf about what stocks the ETF is betting against right now.

California’s Major Media Focuses on Ali Simard, President West Coast office for Stern & Co.

Alison Simard, who does public relations and marketing work for KIND Financial at their Hollywood office. KIND Financial makes financial and tracking software for cannabis businesses.

BY BROOKE EDWARDS STAGG, Staff Writer, Orange County Register

Alison Simard has done public relations for 20 years, representing technology and finance clients as West Coast president for Stern & Co.

Three years ago, the Los Angeles resident was having dinner with David Dinenberg, a real estate broker and entrepreneur whose kids had become friends with her kids. Unsure how Simard would react, Dinenberg cautiously brought up his latest venture: KIND Financial, a company that would offer online payment systems for cannabis businesses and technology to track marijuana from seed to sale.

Simard had never worked with the marijuana industry, and she doesn’t personally partake. But she saw the need for helping businesses comply with federal banking regulations without ever touching the plant.

“I told him, ‘You’re brilliant,’” Simard, 45, recalled. “He was about to get the tiger by the tail.”

Initially, Simard offered Dinenberg marketing advice as a friend. He’d hired a PR specialist focused on getting word about KIND Financial products to industry publications such as High Times magazine. Simard encouraged him to target The New York Times and CNBC as he sought to build a professional, legitimate company.

Now she spends time each week at KIND Financial’s L.A. headquarters crafting story pitches and a strategy aimed at making Dinenberg a thought leader in the industry. In the past few months, as pot has become what she terms a “sexy” media topic, it’s become an easier sell.

She sleeps well at night, she said, with none of the qualms she’d have in representing a predatory lender or – as an animal rights activist – Sea World. Her firm’s other clients have also been receptive, she said, even asking how they can invest in the company that now counts TV personality Montel Williams among its board members.

“Almost all of our clients are finance and business people, and they follow the money,” Simard said. “At the end of the day, it’s business.”

About the pot market

Here are thoughts on the legal marijuana industry from veteran public relations specialist Alison Simard:

• "Understand, whether you are pro or against it personally, the change is here and the change is happening."

• "We are at the beginning of an industry, and it's very rare to be standing on the platform with the train coming in."

Stern & Co. ran a campaign on behalf of our client TrimTabs Asset Management about its Float Shrink ETF announcing it would start a new, independent ETF after being wrongfully fired by AdvisorShares despite the fact that TTFS had a five-star Morningstar rating. This campaign in early summer set the groundwork for an announcement when the new ETF began trading in later September. Jason Zweig, Wall Street Journal, featured the story: